Research paper on the Saudi Stock Market (Tadawul), a study on the market effeciancy

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Description

  • Choose from the Saudi stock market any corporate Finance event that has an implication on the price of the stock.
    • Example: dividends announcement, merger, acquisition, raising capital, etc.. (one Event)
  • Perform an event study on a reasonable sample with minimum 5 stocks that experienced such event.
  • Analyze statistically your findings.
  • Your study should include the following sections:
    • Literature review. (doesn't have to be based on all the articles or text books)
    • Methodology. (event Study; process and steps followed)
    • Findings.
    • Conclusion.
    • References.
  • Consult sources of literature from theoretical and applied research framework in all of your work. Your text book or published research that was done on your selected event.
  • 11 Pages report (including table of content, Executive summary, references)
  • graphs of the stock behavior should be included (from Tadawul)
  • a good source would be argaam.com where you will find such announcements
  • the due date is on the 24th Dec 2018 maximum at 12:00 AM (cannot be extended)

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Explanation & Answer

Attached.

Surname 1
Name
Instructor
Course
Date
Corporate Events Effects on Market Efficiency
Abstract
Corporate events are any events held by an organization targeting its clients, shareholders
or employees. There are several reasons that organizations choose to hold such events and may
include; to reward, entertain, establish partnerships or launch new products. In the changing
business world, these events have become common and have a huge impact on the whole
organization, especially their stock valuation. This is caused by the maximization of shareholder
value which has varying impact on the target and acquiring company (Bessembinder & Feng np).
Corporate event increases the wealth of the shareholders hence impacting the share prices. In the
modern business world, there are changes in the markets or government regulations that prompt
organizations to indulge themselves in such events for different reasons.

Surname 2
Introduction
There are many corporate events occurring in Saudi Arabia between organizations, with
the majority being listed companies. One of the most common corporate event taking place in the
country is Mergers and Acquisitions (M&A). Mergers and acquisitions can be defined as the
consolidation of organizations or assets. Various types of financial transactions are carried out in
the process. Organizations gain other companies or part of the companies in their goals to expand
to new markets, offer new products and dominate their industry by minimizing the competition.
The trend has become a common corporate event which has a significant effect on stocks offered
by organizations. In the most occasions, the share prices increase since the value of the
organization also increases (Khotbi & Patrick np). Investors are interested in or attracted to such
organizations since they control larger markets and show their ambitions towards expansion and
growth. Therefore, it is critical for investors to follow up on acquisitions being made by the
organizations to determine whether they are effective and offer long-term advantages that will
have a positive impact on their investments.
Problem Statement
As stated earlier, corporate events always affect the price of stocks in the market. Positive
corporate events always affect stocks prices positively or they increase over time and vice versa.
Mergers and acquisitions are a good example of corporate events utilized by organizations in the
modern business environment. They are aimed at increasing an organization’s value by accessing
new markets or products that can boost productivity. This is the method that SABIC, a Riyadh
based chemical company, utilized to gain global market. This research paper will focus on
understanding how the event affected the organization’s stock as well as of other organizations in
the industry or related industries.

Surname 3
Literature Review
The stock market is the main source of information used in this research. The stock
market utilized by this research paper is Tadawul. Tadawul is critical to the research as it
provides real-time data recorded over time. The research requires data recorded over months to
better understand how stocks in the market changed to determine whether they affected the
organization positively or negatively. It also helps determine whether the decision to carry out
the event was informed or not and how the investors viewed it. Therefore, Tadawul will provide
most of the data used for the research and help in carrying out important statistics which will
determine how the stock market was affected by the corporate events. Other supporting data will
be derived from similar organizations who carry out activities aimed at educating investors to
make effective decisions which will affect their investments in a positive manner.
The next source of information is websites that offer analysis as well as data from stock
markets to determine the organization’s stock market. The website that will be utilized in this
research is Argaam; the primary source for financial news and provides real-time updates on
markets with data and analysis in Saudi. The website has adequate information on deals or events
that took place in Saudi and the...


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